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The existence of targeted self-employment initiatives within
public and private rehabilitation service systems is a fairly recent
phenomenon, and the shape and style of these initiatives is still very much a
work in progress. From million dollar statewide systems to local pilot
projects, the objective is similar: To offer people with disabilities the
choice of pursuing self-employment through effective service systems that
encourage and support business success.
A review of active self-employment initiatives targeted to
individuals with disabilities reveals a common set of building blocks for
successful program design and implementation. Those building blocks are:
- Internal policy regarding entrepreneurship and self-employment
- Counselor preparation
- Assessing client potential
- Understanding market opportunity
- Technical assistance
- Financing, and
- Tracking and monitoring.
There is no single "best" method for developing or delivering this
bundle of services. Initiatives are shaped by local regulations, policies, and
customs.
Internal Policy Regarding Entrepreneurship and Self-Employment
Analysis of self-employment policies of vocational rehabilitation
agencies in three states (Minnesota, Texas, and Iowa) revealed several
commonalities. The agencies included in this analysis were Minnesota Vocational
Rehabilitation, Texas Commission for the Blind, and Iowa Division of Vocational
Rehabilitation Services/Iowa Department for the Blind. The analysis included
general self-employment policies and structured self-employment
initiatives.
Three common themes were identified: (1) Self-sufficiency as the
primary objective of self-employment, (2) Comprehensive business planning as a
valuable counseling tool, and (3) Parameters for financing self-employment
outcomes. The specifics of state policies relative to these common themes
varied from state to state.
The following synopses provide a snapshot of policies relative to
self-employment in the three states:
- Minnesota Vocational Rehabilitation requires a business plan
that has received a positive recommendation from a Small Business Development
Center (SBDC) or a similar, recognized business planning organization.
Businesses that receive a positive recommendation may receive up to $5,000 for
business start-up, and no owner investment is required. Approved business plans
must demonstrate that the business will provide significant income, enabling
the owner to exceed expenses and, at a minimum, significantly supplement their
income with business profits.
- Texas Commission for the Blind recommends a business plan, but
only requires it for business start-ups requesting $7,500 or more; counselors
can fund business ventures requiring less than $7,500 in start-up capital
without a formal business plan, even when self-sufficiency is not eminent.
Texas policy does not establish a cap on the amount of funds that may be
provided, and owner investment is not required.
- Iowa Division of Vocational Rehabilitation Services (DVRS) and
Iowa Department for the Blind (IDB) also require a business plan. When
appropriate, the Iowa agencies purchase one-on-one technical assistance to help
consumers prepare comprehensive business plans. In Iowa, DVRS consumers who are
in the exploratory stage or for whom self-sufficiency is not eminent may
participate in the First Step Program. First Step participants may receive
financial assistance grants up to $2,500 with an approved business plan, and no
owner investment is required. Those who pursue self-employment as a means for
achieving self-sufficiency may apply for technical and financial assistance
from Iowa's Entrepreneurs With Disabilities Program (a cooperative program
supported by both DVRS and IDB). The Entrepreneurs with Disabilities Program
provides equity grants of up to 50 per cent of the essential operating capital
required for business start-up or expansion, not to exceed a ceiling of
$10,000. Participants in this program must leverage the remaining capital from
other sources such as owner investment, commercial loans or friends and
family.
Some variation between states regarding what can and cannot be
purchased with these funds was noted. Generally, public vocational
rehabilitation funds may be used to purchase some level of stocks, supplies,
and equipment. The purchase of real estate is universally prohibited, and
policy regarding operating capital for advertising, legal services, accounting,
utilities, and capital for the purchase of vehicles varies from state to state.
Insight from the policy review suggests that while public
vocational rehabilitation programs do have self-employment policy models to
draw from, inconsistencies are found in fundamental business issues:
- Is technical assistance and business planning a valued service
regardless of the funding requirements of the venture?
- Should consumers requesting self-employment financial
assistance dollars convey commitment to their vocational rehabilitation plan by
participating in financing the goal?
- Finally, are hobby ventures consistent with successful
employment outcomes as defined by traditional vocational rehabilitation?
These are among the existing policy issues critical to public and
private vocational rehabilitation organizations and will likely be joined by
others that emerge as self-employment outcomes continue to grow and
rehabilitation professionals acknowledge and address lessons learned.
Preparing the Vocational Counselor
The attitude and experience of vocational counselors regarding
self-employment or small business ownership is a key factor in determining if
counselors present them as available options. Counselors who are unfamiliar or
uncomfortable with self-employment or small business ownership may be less
likely to present them as an options. If they are not presented as options,
regardless of the reason, the consumer does not really have a choice.
For many years, self-employment has been regarded by
rehabilitation professionals as an option of last resort. Low on the list of
preferred outcomes, self-employment has been considered only when competitive
employment and job placement fails. This is due, in part, to the fact that it
requires a level of risk and resources unfamiliar to most rehabilitation
professionals. It requires them to operate outside of common vocational
rehabilitation strategies and demands skills and expertise that they have not
had the opportunity to develop. This is compounded by insufficient policy
guidance relative to self-employment. Thus, counselors who pursue
self-employment with their clients are often unsupported by their agencies.
Organizations that are committed to entrepreneurship must support
front-line employees with clear policies and ongoing education. As Franklin
Corbin, a counselor with the Oregon Department of Human Resources, Vocational
Rehabilitation Division, stated, "Self-employment used to be the kiss of death
at this agency." He added that, " Fortunately, policy has changed, and if
self-employment is the best choice, then let's do it!" This counselor's
attitude and understanding of self-employment was supported by his agency with
continuing education on the specifics of small business start-up and a clear
agency policy toward self-employment.
Few states require vocational rehabilitation counselors to assist
in the development of a business plan. Rather, most counselors are encouraged
to identify and utilize local business planning resources. Nonetheless, it is
essential that counselors have a basic understanding of self-employment and
small business in order to provide adequate counseling support to clients. This
basic understanding, developed through ongoing training, will help counselors
know how to effectively use outside business planning resources, when to access
them, and how to support clients in using those resources effectively.
A sample course outline for VR staff should include:.
- Self-employment as a proven and successful vocational goal
- Internal self-employment policy review
- Characteristics of successful business owners
- Assessing potential Business plans–what are they?
Products/Services
The market
Business operations
Financial
assumptions and projections
- Feasibility testing
- Community resources
Financing
Technical
assistance
- Agency policy
Monitoring
Case closure.
Assessing Client Potential
Experience has taught me that there is one chief
reason why some people succeed and others fail. The difference is not one of
knowing, but of doing. The successful man is not so superior in ability as in
action. So far as success can be reduced to a formula, it consists of this:
doing what you know you should do.
– Roger W. Babson,
Financier, Educator, Entrepreneur
Within public and private vocational rehabilitation systems, the
use of assessment tools is commonplace. The Guilford Zimmerman Personality
Assessment, the Career Assessment Inventory, and the Wide Range Achievement
Test are examples of assessment tools commonly used by rehabilitation
professionals. Self-employment assessment tools may be a welcome addition for
counselors who lack a background in business development. These tools can help
counselors identify personal characteristics and experience that suggest
proficiencies or deficiencies in self-employment potential. However, these
assessment tools should not be relied upon too heavily for screening purposes,
as it is impossible to measure an individual's entrepreneurial quotient or
scientifically determine the probability for business success based on a test
instrument. As with any tool, the effectiveness of self-employment assessment
tools depends on how they are used.
Although there is no way to definitively test an individual's
entrepreneurial quotient, there are a number of characteristics that
entrepreneurs tend to share. These traits, as well as personal characteristics
and financial issues, should be explored with aspiring business owners:
- Self discipline
- Motivation
- Internal locus of control
- Comfort with risk
- Ability to handle stress
- Money management skills
- Organizational skills
- Sense of humor
- Financial goals
- Credit history
- Personal support network
- Health factors.
Two instruments used by counselors within public and private
vocational rehabilitation organizations to explore an individual's viability as
a potential business owner include:
- The Business Assessment Scale, a statistical business
evaluation (Goodman and Herzog & Associates), previously or currently used
by vocational rehabilitation agencies in Michigan, Colorado, New Jersey,
Pennsylvania, North Dakota, New Hampshire, Montana (Missoula area only), Maine
(regionally), Virginia, and Alabama.
- The Measure of Self-Employment Potential (C/S Vocational
Consultants), a counseling tool developed for rehabilitation and
self-employment counselors by a team of certified rehabilitation counselors who
provide small business technical assistance to people with disabilities. The
tool is designed for use by counselors to not only collect critical data, but
to encourage dialogue in the early stages of considering and then developing an
employment plan. Introduced in 1999, The Measure of Self-Employment Potential
is currently in use by Alaska Vocational Rehabilitation, Maryland Division of
Rehabilitation Services (pilot program), Texas Commission for the Blind,
Abilities of Florida (Clearwater area), Oklahoma Department of Rehabilitation
Services, Iowa Division of Vocational Rehabilitation Services, and the
Wisconsin Women's Business Initiative.
Market Opportunity
Selection of the right industry is a critical step in laying the
groundwork for business success or failure. Far too many entrepreneurs select
an industry based solely on personal interests, without adequate investigation
of the marketplace. Many active self-employment initiatives address this issue
by helping aspiring entrepreneurs conduct initial research designed to answer
the following questions:
- What business idea appeals to the individual?
- What qualifications does the individual have relative to the
business type?
- What are industry trends?
- Who are the customers?
- Will they buy from a new entrant?
- Is there room in the market for a new entrant? Who are the
competitors?
Research regarding these initial questions in the business
planning process can provide an early indication of business feasibility.
While most business concepts are derived from personal interests
and then tested for feasibility, the converse is also effective. In Maryland,
the Division of Rehabilitation Services (DORS) sponsors the RISE Program (Reach
Independence through Self-Employment), which furnishes prospective and existing
business owners with the results of a Targeted Industry Analysis (TIA). The TIA
is a market research tool that identifies industries with the highest
probability of success for new entrants and expansions within specific
geographic boundaries. More specifically, the TIA report reveals industries
with significantly fewer than the expected number of firms for their market
area. Through the identification of these market opportunities, RISE
participants can identify an industry opportunity that not only fits their
personal goals but also has a high probability of business success.
Technical Assistance
Technical assistance for business start-up and stabilization is
central to any comprehensive small business initiative. The need for technical
assistance for business expansion purposes is rare–expansion indicates
that the business is stable and successful, but the need to stabilize an
existing business is common to all small business owners.
Rehabilitation programs may tap into a variety of local technical
assistance resources, including professional consultants, Small Business
Development Centers, and microenterprise organizations. Technical assistance
can be delivered effectively in both one-on-one and group training formats.
Regardless of the source and format of technical assistance, it should help the
entrepreneur identify what information is critical to the business, where to
access that information, and how to organize the information into a
comprehensive and useful format (a business plan). Business planning will
surface potential pitfalls so that they can be addressed prior to business
start-up.
In addition to business plan development, new and potential
entrepreneurs frequently need specialized technical assistance services such as
specific marketing research and interpretation, development of record-keeping
and bookkeeping systems, tax consultation, Internet expertise, and legal
counsel regarding leases, contracts, and patents. It is impossible for any
single organization to have the internal capacity to address the wide range of
needs that may arise. However, it is imperative that resources are available to
offer specialized assistance when it is critical to the success of a business.
Technical assistance may also be prescribed to review completed
business plans. Review is a logical conclusion to business plan development and
may support rehabilitation professionals in making funding decisions. Business
plan review is particularly important when an individual is seeking financing
outside of the rehabilitation system. Thorough review reveals the potential
business owner's depth of knowledge regarding the intended operation of the
business and prepares him or her to successfully seek and obtain adequate
capitalization. Methods of review vary from peer review to analysis by
management to evaluation by a team of financial professionals.
Business Financing
A combination of owner savings, commercial financing, non-bank
financing, friends and family account for the capitalization of most business
starts. A small percentage utilize other resources that may include credit card
advances, vendor credits, and second mortgages on a residence. Of the 10,000
members of the Disabled Businessperson's Association, 47 per cent identified
friends and family as their primary source of start-up capital with only 7 per
cent acquiring capital from banks or investors. These statistics exemplify the
difficulty targeted populations experience in trying to gain access to
traditional sources of capital. Inadequate owner equity, due to exhausted
assets often related to the disability, keeps many entrepreneurs with
disabilities from obtaining financing from traditional sources. Ongoing
economic distress, which inevitably impacts credit histories, is also common to
their inability to access capital.
Many public vocational rehabilitation programs rely on Section 110
(case service) dollars to provide initial business funding. Many initiatives
also encourage qualified individuals to access Social Security PASS (Plan for
Achieving Self-Support) Plans and venture funding from the Veteran's
Administration, when applicable. The advantage of these resources, aside from
the fact that they are grants, is that they are booked on the asset side of the
balance sheet and can be presented as owner equity to leverage a variety of
bank and non-bank resources. Loan guarantees, microloans, and state and local
economic development funds are more easily accessed when a comprehensive
business plan and an equity grant from a public or private rehabilitation
agency are in place.
Only a few state programs have developed targeted loan funds for
people with disabilities. In Pennsylvania, a partnership between Pittsburgh
Vision Services and New Castle's Office of Vocational Rehabilitation (OVR) have
created a microloan fund for consumers of OVR services. The fund provides low
interest loans of up to $10,000 for a maximum term of five years. Consumers are
expected to provide 20 per cent of project costs from their own equity. In
three years of operation, the program funded twenty-one new business starts in
the New Castle area. In addition to the microloans, this partnership also
provides ongoing monitoring and direct technical assistance.
Another example of a targeted loan fund is the Microloan Program
operated by the Ann Arbor, Michigan, Center for Independent Living. The fund,
which has been operational for 2 years, provides loan guarantees of up to
$25,000 or 50 per cent of a commercial loan (whichever is less). The Microloan
Program is capitalized primarily through a grant from the Mott Foundation with
additional funds from United Way and Michigan Rehabilitation Services (MRS).
The statewide program is open to any applicant with a disability, with the
majority of participants being consumers of MRS. MRS consumers may receive an
equity grant from MRS and use the Microloan Program if additional capital is
required.
Tracking & Monitoring
As difficult as it may be to make the trip from initially
considering self-employment through development of a business plan and
ultimately the grand opening–that first day in business is really just the
start of the journey. The most challenging days lie ahead for both the new
entrepreneur and those who provide self-employment programming. Agencies that
present and encourage self-employment as a vocational rehabilitation option
should create a system to monitor the health and vitality of the start-up
enterprises. Rehabilitation counselors, local government and non-profit
agencies, volunteers, private service providers, or any combination of the
above can effectively monitor business progress. With a monitoring system in
place, the needs of the business and the entrepreneur can be addressed as they
arise.
Iowa's Entrepreneurs With Disabilities Program (EWD) utilizes a
cadre of professional business consultants who work one-on-one with the
business owners at the direction of the program manager. Through monthly
monitoring sessions and periodic on-site visits, the business consultants are
able to observe operations first-hand, review and analyze records, and
prescribe appropriate technical assistance as required. Policy ensures that EWD
clients are monitored for a period of two years from the time of start-up or
until financial self-sufficiency is achieved. This policy varies from
traditional rehabilitation policy, which recommends case closure within three
to four months following successful placement in competitive employment.
Ohio Rehabilitation Services' EnterpriseWorks Program utilizes an
alternative approach to monitoring client progress and providing technical
assistance. The Ohio initiative delivers individualized technical assistance to
their participants through regional Small Business Development Centers (SBDCs).
This ongoing technical assistance is provided to business owners for as long as
necessary. The expense to EnterpriseWorks is $250 per month per client served.
Annual contracts with the SBDCs describe the specific monitoring and counseling
activities to be undertaken in each community. SBDCs also play a major role in
the provision of technical assistance and monitoring services in
self-employment initiatives in New York, Michigan, Maryland, and Alabama.
Summary
There is no standard "cookie cutter" approach to designing and
implementing successful self-employment programs targeted to individuals with
disabilities within public and private rehabilitation service systems. Existing
programs across the nation are as unique as the individuals they serve. While
no two programs are identical, they share several common threads: internal
policy, counselor preparation, assessment of client potential, understanding
market opportunity, technical assistance, financing, and tracking and
monitoring. These program characteristics serve as building blocks for
successful self-employment programs and can be shaped to reflect the unique
needs of local areas.
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